Working capital policy

Would you like to obtain working capital for your export finance transaction without burdening your regular lines of credit with your bank?

Our insurance for working capital financing offers you a solution.

 

 

 

 

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Risks covered

Insurance for working capital financing protects the financial institution which granted you an extra working capital facility for your export transaction. It insures your financier against the risk that you will not pay amounts owed on the facility for principal, interest and/or late payment interest. Cover is provided for the duration of the manufacturing or completion period as, upon delivery of the goods or completion of the work, you are to receive payment (either in cash or through refinancing) from your client and then repay the working capital facility. If you default on your working capital facility, we will indemnify your financier after a three-month waiting period.

Risk Analysis

Insurance for working capital financing often comes into the picture when your current lines of credit are insufficient for your working capital needs for your export transaction. The purpose of working capital financing cover is therefore to create financial headroom, thereby enabling you to conclude more export transactions.

Atradius will assess the creditworthiness of your organisation. In general, our exposure for a single transaction may not exceed your organisation’s equity, and our total exposure for all the transactions we have insured for you may not exceed three times your organisation’s equity.

When deciding whether to underwrite a transaction, we will also determine whether additional security will be required, such as a pledge on the goods being manufactured and the related inventories. If the continuity of your organisation would be at risk if your client should default, Atradius will be able to provide insurance for working capital financing only in combination with its exporter’s insurance policy.

Deductible/own risk

The financier providing the working capital facility will bear 20%-50% of the risk.

Premium

Atradius will base the premium on market interest rates and your company’s credit rating. The financial institution providing your working capital facility will be responsible for paying the premium. It may choose to do so in advance or on your working capital facility interest payment dates.

Financing in Foreign Currency

It is possible to take out insurance for a loan in other currencies than the euro. For stable, hard currencies (such as the US dollar, British pound or Japanese yen) the premium and any indemnification will be denominated in the currency concerned. In many cases we can also insure loans in other currencies. In such cases, the counter value of the premium and any indemnification will be calculated and payable in euros. When we insure loans denominated in a foreign currency, we will pay any indemnity at the relevant exchange rate up to a maximum rate. The cap rate is usually very high and therefore most of your exchange rate risk will be covered.

Foreign Banks

Our buyer credit insurance is available for Dutch and foreign banks. Banks established in non-OECD countries may be eligible for buyer credit insurance after their reputation has been checked.

Documentation

Atradius does not take documentation risk. This means that we do not examine the loan and security documentation when underwriting a transaction. You will be asked to provide key details of the loan on the application form. In our insurance policy we will stipulate any conditions which we require you to include in the loan documentation.

Anti-bribery declaration

The Dutch state has ambitions with regards to ‘clean’ trade. It is therefore important that we want to make certain that transactions with eca cover are free of bribery. We will ask you to sign an anti-bribery declaration at the moment that we are going to issue a policy to you. Under the downloads you can read an example of such a declaration.  

Questions or advice?

Please contact an Atradius Dutch State Business advisor via +31 (0) 020 553 26 93 or info.dsb@atradius.com.

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.